Final answer:
For divorce agreements entered into before January 1, 2019, alimony is deductible for the payer and taxable income for the recipient. The old tax rules applied to such agreements, providing tax relief to the payer. The tax treatment changed for agreements executed after this date due to the Tax Cuts and Jobs Act of 2017.
Step-by-step explanation:
For a divorce agreement entered into BEFORE January 1, 2019, alimony is a. Deductible for the payer and c. Taxable income for the recipient. Prior to the changes introduced by the Tax Cuts and Jobs Act of 2017, which took effect in 2019, the payer of alimony could deduct those payments from their federal income tax, while the recipient was required to report such payments as taxable income. This system was designed to provide tax relief to the payer, who typically is in a higher tax bracket than the recipient.
Under the pre-2019 tax law, these rules applied for all divorces and separate maintenance agreements that were executed prior to January 1, 2019. For agreements executed after this date, there are different tax implications. Specifically, alimony payments are no longer deductible for the payer, and they are not considered taxable income for the recipient. Therefore, it is crucial for individuals affected by these changes to understand which rules apply to their specific situation.